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XBRL: Introduction & Overview

XBRL: Introduction & Overview. Grant Boyd, CA gboyd@aicpa.org Technical Manager – XBRL, AICPA. Session Topics. Why XBRL XML / XBRL Overview Global Adoption Public Sector. XBRL. XBRL. XBRL. The Business Reporting Supply Chain. XBRL Financial Statements. XBRL-GL The Journal

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XBRL: Introduction & Overview

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  1. XBRL: Introduction & Overview Grant Boyd, CA gboyd@aicpa.org Technical Manager – XBRL, AICPA

  2. Session Topics • Why XBRL • XML / XBRL Overview • Global Adoption • Public Sector

  3. XBRL XBRL XBRL The Business Reporting Supply Chain XBRL Financial Statements XBRL-GL The Journal Standard Transaction Standards Business Operations Internal Financial Reporting External Financial Reporting Investment, Lending, and Regulation Processes Collaboration is KEY!!! Companies Financial Publishers and Data Aggregators Investors Participants Trading Partners Management Accountants Auditors Regulators Software Vendors

  4. Then … XBRL began with the idea of a single individual - Charlie Hoffman, from a small CPA firm in Tacoma, Washington … … and 13 Sponsoring Companies

  5. Members 400 300 200 100 Time 2000 2001 2002 2003 2004 2005 2006 XBRL Membership Growth 400 300 275 210 130 80 13

  6. XBRL Jurisdictions NO SE FI NL DE CZ DK IASB LU PL RU HU CA SI UK AT UA IR BE TR US SP GR CN FR PT LB JP IT KR CH IN MT VZ HK AE CO SG BR Established Jurisdictions AU ZA Provisional Jurisdictions NZ AR in Construction & in Project

  7. XBRL Regulatory Adoption – Publicly Announced • KOSDAQ – Korea • National Tax Agency of Japan • New Zealand Exchange • Patent and Registration Office (PRV – Sweden) • U.S. Securities & Exchange Commission • Shanghai Stock Exchange 800+ companies • Shenzhen Exchange • Tokyo Stock Exchange • UK Financial Services Authority • UK Inland Revenue • US Federal Financial Institutions Examination Council (includes FDIC) • Australian Tax Office • Banco de España • Bank of Japan • Bundesbank • Committee of European Banking Supervisors (CEBS) • Chinese Securities Regulation Commission (CSRC) {sponsoring Shenzen and Shanghai exchanges} • Danish Commerce & Companies Agency • Dutch Tax Authority • Dutch Water Authority • Eurostat • EU Commission – XBRL in Europe • Financial Service Agency of Japan • The Irish Revenue • Spanish Stock Exchange Commission – 3000 companies

  8. This RFP contemplates a significant, multi-year project to update the system's underlying technology.

  9. During the next 12 months, the SEC will move beyond the EDGAR concept of electronic filing of paper-based forms, to an interactive data concept in which investors can have instant access to data that's ready to use in myriad software applications on their desktops The SEC has already begun to move toward the use of interactive data in its disclosure program. Since February 2005, the Commission has been testing the use of data tagging in periodic and investment company reports, using a format known as Extensible Business Reporting Language (XBRL). Filing financial data in XBRL is currently voluntary, and a number of registrants have begun to use the program.

  10. Gartner – XML Hype Cycle, 2005

  11. Why XBRL …

  12. Consolidated Profit and Loss Account for the year ended June 30, 2003

  13. Democratizing Access to Financial InformationPercentage of Companies Receiving Coverage Includes all common stock on NASDAQ National Market and NYSE. Source: Thomson Financial. December 2002.

  14. Without XBRL … Average Time for Updating Financial Information—11 days Value-added Analysis and Decision-making? 90% time spent on Mechanics 10% With XBRL … Mechanics Average Time for Updating Financial Information—1 days With XBRL? More Time for Analysis => Better Analysis => Less Risk For example … helping banks

  15. Better information leads to better management… better governance… better markets

  16. XML / XBRL Overview …

  17. Simple problem: 1,200,000 results in a typical search (e.g. IBM Fixed Assets)

  18. Content—without Context Searching for the word “Mercury” on the Web can provide a wide variety of results—too many—such as: Hg

  19. Auto Industry • <CAR-MODEL> • Chemical Industry • <SYMBOL> • Publishing or Mythology • <GOD> • <RECORD-LABEL> • Music Industry • Aerospace Industry • <PROGRAM> • Astronomy • <PLANET> “Content in Context” (Industry-specific)

  20. XML Markup: What Does it Look Like? Gerald Bostock 8080 Floppy Disk Drive San Sushi, CA 94078 +1 (650) 555-1424 Birthdate: 19 October 58 <name>Gerald Bostock</name> <address> <street>8080 Floppy Disk Drive</street> <city>San Sushi</city> <state>California</state> <country>United States of America</country> <postcode>94078</postcode> </address> <telephone>6505551424</telephone> <birthdate>1958-10-19</birthdate> Ordinary information Metadata: Information about information

  21. XBRL is a pretty simple concept… • Tag individual concepts for electronic dissemination. • Most concepts that are disclosed are defined in a common framework – like IFRS • Those that aren’t are the unique aspects of a particular company’s operations. They are interesting because they are different to what their peers report. • Where a concept belongs to a common framework, use that. • Where a concept only belongs to a single organization, define it, and disclose that definition, together with the fact.

  22. Barcode has done for product distribution … Efficiency Savings Quality

  23. … what XBRL is doing for business reporting

  24. XBRL Basics • XBRL is XML • It is Extensibile • There is an XBRL specification – tells you how to use XBRL • Hinges on taxonomies – the dictionary of terms for business reporting – which includes financial statements

  25. Standardization Presentation Cash & Cash Equivalents References GAAP I.2.(a) Instructions Ad Hoc disclosures Label cashCashEquivalentsAndShortTermInvestments Calculation Cash = Currency + Deposits FormulasCash ≥ 0 Contexts US $ FY2004 Budgeted Validation XBRL – More Than Just Definitions Presentation Comptant et Comptant Equivalents Presentation 現金及び現金等価物 Presentation Гроші та їх еквіваленти Presentation Деньги и их эквиваленты Presentation Kas en Geldmiddelen Presentation 现金与现金等价物 Presentation Geld & Geld nahe Mittel XMLItem XBRL Item XBRL Item

  26. Instance Document …

  27. XBRL Creation Company Financial Statement XBRL TaxonomyCreated by XBRL Consortium TAGGING XBRL DocumentCreated by Preparer Consumed Rendered

  28. Taxonomies Language Significant upfront investment Airport runway Software Tools Needs critical mass Fax machine Two Critical Pieces for Adoption Progress … Growing monthly 2002-2005

  29. Public Taxonomies Time 2000 2001 2002 2003 2004 2005 2006 XBRL Taxonomy Growth February, 2005 US GAAP C&I US GAAP Bank US GAAP Ins SEC Certification Mgmt Report Accountants Report MD&A This does not include any private taxonomies such as those prepared for statutory purposes. Nov, 2005 General Ledger June, 2004 IFRS GAAP NZ GAAP UK GAAP July, 2005 China Framework IFRS GAAP US GAAP Invest Mgt January, 2004 UK GAAP 2.0 Canada GAAP June, 2001 General Ledger

  30. Tools Time 2000 2001 2002 2003 2004 2005 2006 XBRL Tools Growth(Representative Listing) FDIC Vendors DBI Financial Systems, Inc.FinArchFRS Global Financial Reporting & AnalyticsIDOM, Inc.Information Technology, Inc.Fidelity Regulatory SolutionsJack Henry & Associates Inc. Semansys Integrator Semansys Analyzer Core Filings Microsoft Business Solutions Snappy Reports Carthesis FR Solutions J2R Batavia Data Driver Semansys Deployment Manager Metapraxis Adobe DecisionSoft True North High Ridge Technologies UBMatrix Automator Pro IBS Open Digital Reporting Ipedo EII Software AG Covarity Hyperion Fujitsu XWand Fujitsu Oracle XBI Software IBMatrix SAP UBMatrix Converter Rivet Software XBRL Solutions UBMatrix Tool Kit SavaNet DynAccSys Xabra Caseware Semansys Composer Hitachi CBRP Hitachi Ximba Allocation Solutions Navision Creative Solutions Hitachi XiRute Edgar-Online IMetrix

  31. XBRL Adoption Accelerates …

  32. Tax Authorities NO CA UK DE NL IE JP CN Tax XML Technical Committee recommends use of XBRL (Oasis-OECD) 29 Tax authorities AU NZ Pilot Committed

  33. Financial Banking Regulators EU CEBS SE UK DK BE DE FR NL Portugal LuX ES US CN JP KR SG AU ZA NZ Pilot Committed

  34. Exchanges & Equity Regulators OBX CSE LSE TSX Deutsche Börse KOSDAQ EuroNext Tokyo SEC Shanghai Lux Korea SWX Shenzen Taipei Singapore Sao Paulo Johannesburg ASX NZSE Live Eval Pilot

  35. Different kinds of reporting • “Open” • Aggregate data • Financial Statements • Common base disclosures • Industry, company and segmented additional disclosure • “Closed” • Aggregate data • Complex forms with hundreds or thousands of concepts • Advanced validation

  36. More concrete… • Closed form reporting for regulators in XBRL is now absolutely normal. Numerous major implementations. • Financial statement reporting in XBRL is still in its infancy, in terms of number, but is rapidly getting acceptance at all levels, from all stakeholders. XBRL in Fall 2005 Closed Forms Financial Statements

  37. XBRL Regulatory Adoption – 40+ Projects Publicly Announced around the world KEY PROJECTS • Banco de España • Dutch Ministry • US Federal Financial Institutions Examination Council (includes FDIC) • Shanghai Stock Exchange • SEC Voluntary Filing Program

  38. Dutch Taxonomy Project • Major eGovernment initiative • The Ministry of Justice and the Ministry of Finance in a joint effort intend to reduce the administrative burden of businesses by using XBRL to make the composing of reports and exchange of financial data easier. • Focuses on three important reporting chains: • Reporting of taxes; for instance profits tax, wage taxes, value added taxes (VAT) and Income taxes • Reporting of annual accounts • Reporting of economic statistics Projected savings for Netherlands businesses? 350 million euro

  39. Regulator Regulator Regulator Company Regulator Regulator Regulator Company Company Regulator Regulator Regulator Regulator Company Company Company Regulator Regulator Regulator Regulator Company Company Company Regulator Regulator Regulator Regulator Company Company Company Regulator Regulator Regulator Regulator Company Problem = Exchange of data between regulated entity and regulator Company Regulator Regulator Regulator Regulator Regulator Regulator Regulator Regulator Company Regulator Regulator Regulator Regulator Company Company Company Regulator Regulator Regulator Regulator Company Regulator Company Company Regulator Regulator Regulator Regulator Company Regulator Company Company Regulator Regulator Regulator Regulator Company Regulator Company Company Regulator Regulator Company Regulator Regulator XML Schemas Company Regulator Regulator Regulator Regulator Proprietary solution for Regulator Looks good to the regulator Regulator Regulator Regulator Regulator Company Regulator XML Schema Company Company Regulator Regulator Regulator Company Regulator Company Company Company Regulator Regulator Company Regulator Regulator Company Company Company Regulator Regulator Company Regulator Regulator Company Company Company Regulator Regulator Company Regulator Company Company Company Regulator Regulator Company Regulator Company Regulator Regulator Proprietary solutions looks different to the companies and is a costly and complex model Regulator Company Company Regulator Regulator Regulator XML Schema Company Company Regulator Regulator Regulator Company Company Regulator Regulator solution = Use XML Schema to define terms for exchange. Regulator builds taxonomy using a (XML Schema) proprietary platform. Company Regulator Regulator Company Company Company Regulator Regulator Company Company Company Regulator Regulator Company Company Company Regulator Solution development – all about me

  40. Regulations Stds (FASB, IFRS) Interpretative Guidance 3rd Party Interpretative Guidance Publicly available Audit Guidance Instructions Internal Reporting Instructions Reporting Sources XBRL Validation Solution development - Collaborationyields benefits to all participants Company Regulator

  41. http://www.sec.gov/spotlight/xbrl.htm Preparer Benefits? Consumer Benefits? SEC Benefits?

  42. Public Sector Project Collaboration Example • New Zealand Government taxonomy under development • 8 key agencies collaborating on development (includes NZX, IRS, Statistics, E-gov, OAG, Audit Office, ACC, Treasury) • Compared standard forms required from business – common Information needs • Simplify reporting for preparers by producing 1 XBRL instance – feeding to multi regulators

  43. Transforming Business Reporting The global XML standard for business and financial reporting XBRL is happening!!!

  44. XBRL: It's Unstoppable Grant Boyd, CA Technical Manager – XBRL, AICPA

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